PRACTICE AREA

Cannabis Licensing, Compliance, and Industry Consultant

Dan Johnston has been one of the preeminent voices in the New York recreational marijuana space, and has prepared for years for the passing of the MRTA, discussed below. Dan can assist your business not only in the licensing process, but also with refining your business strategy, introductions and referrals to both traditional and industry specific service providers, maintaining compliance with rules and regulations as they are adopted, transactional assistance, and putting together teams that can compete at the highest level in this new industry. If you are looking to start a business in this space, the time is NOW to prepare your roll-out. Let’s have a conversation and see how we can help you.

The Law:

On March 31, 2021, New York Governor Andrew Cuomo signed into law the Marijuana Regulation and Taxation Act (MRTA), which legalizes adult-use cannabis for individuals 21 and older and regulates cannabis in the state of New York.

A new Office of Cannabis Management (OCM)—an independent agency operating as part of the New York State Liquor Authority—will be responsible for regulating the recreational cannabis market as well as the existing medical marijuana and hemp programs and will be overseen by a five-member Cannabis Control Board. Three members will be appointed by the governor, and the Senate and Assembly will appoint one member each.

A system of licenses for commercial cultivators, processors, distributors, retailers, cooperatives and nurseries will be created, with a prohibition on vertical integration except for micro-businesses and existing medical cannabis operators. Social consumption sites and delivery services will be permitted.

Individual jurisdictions will be allowed to opt out of allowing retailers or social consumption sites by the end of this year, but residents could seek to override such bans via a local referendum process.

The legislation sets a goal of having 50 percent of marijuana business licenses issued to social equity applicants, defined as people from “communities disproportionately impacted by the enforcement of cannabis prohibition” as well as minority- and women-owned businesses, disabled veterans and financially distressed farmers.

Tax revenue from marijuana sales would cover the costs of administering the program. After that, 40 percent of the remaining dollars would go to a community reinvestment fund, 40 percent would support the state’s public schools and 20 percent would fund drug treatment facilities and public education programs.

Licensing

ADULT-USE CANNABIS LICENSES
The Office of Cannabis Management (OCM), an independent sector of the alcoholic beverage control division and overseen by the Cannabis Control Board (CCB), will be responsible for licensing cultivators, processors, and dispensaries in New York. The OCM will also regulate laboratory testing and packaging compliance of cannabis products. The OCM has set a goal that 50% of licenses be issued to those from communities disproportionately impacted by cannabis prohibition, and minority-owned, veteran-owned and women-owned enterprises.

The OCM will soon begin to issue and implement regulations establishing the application processes for obtaining the different licenses. Contact us for counsel and assistance.

REGISTERED ORGANIZATIONS FOR MEDICAL MARIJUANA
In New York State, registered organizations are responsible for manufacturing and dispensing medical marijuana. New York State only issued licenses to ten vertically integrated medical marijuana businesses. Currently, the Department of Health is not accepting applications to become a registered organization to cultivate, manufacture, and dispense medical marijuana in New York.

Under the new legislation, current medical cannabis businesses may participate in the recreational market in exchange for licensing fees that will help to fund the social equity program.

PREPARE NOW FOR YOUR UPCOMING APPLICATION
The legal cannabis industry is growing, evolving, and highly-regulated. To succeed, businesses should start preparing now to obtain licenses and insurance necessary to operate legally and position themselves to win. Johnston Law is fully equipped to guide your company as it obtains licenses, identifies and recruits top talent, executes its business plan, and navigates New York’s ever-evolving regulatory scheme. Contact us to request a consultation.

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